Quarterly update on global Polyolefin Elastomers (POE) Market
For the Quarter Ending June 2021
US Polyolefin Elastomer (POE) suppliers reported constrained inventory levels even in Q2 that maintained somewhat firmer pricing in June. Manufacturers reported inventory build-ups until later this year and delay in customer orders which could not be met in Q1 due to weather related disruptions in Q1 and early Q2. FOB Orleans POE Injection Moulding rates showed gains to settle at $2195/mt while Injection Moulding grade was assessed at $2540/mt in June. Leading manufacturer Dow announced idling of its three PE and two elastomers production units in the Americas for at least 30 days at the start of May to cap the inventory gains when the demand is slow due to the pandemic. There was sharp pick-up in demand for grades used in automotive parts and upside in construction and infrastructure as well. Strong pricing somewhat reduced the amount of POE exported out of the US with market players keenly observing the reoccurrences of COVID pandemic across various regions of the world.
During the second quarter of 2021, POE supplies in the Asia pacific region were limited due to lesser imports with some supply lags reported as China’s Guangdong port was closed due to the rising COVID cases towards the end of Q2. Some Chinese producers reported due to the power outages. In India the market activities were subdued amidst the resurgence of the second COVID wave which restricted the public movement and economic slowdown. Ex-Works prices for Butene-based POE in India oscillated around USD 2453 per tonne in June. Overall, the Asian Polyolefin Elastomer demand was healthy, with major enquiries concentrated over the automotive and construction sector in the second quarter.
Polyolefin Elastomer supplies in the European region were improved but the overall market outlook remained pressured for a larger part of the second quarter due to limited availability of feedstock and curtailed production margins due to upstream cost pressure. Whereas, the demand surged, amidst the constant offtakes from the automotive and construction sector. The supply demand gap widened, as a repercussion the pricing trend of almost all POE grades was well supported throughout the second quarter of 2021.
For the Quarter Ending March 2021
Polyolefin Elastomers market in the North American region was severely impacted by the seasonal storms which caused power outages and forced shutdowns at several manufacturing plants in the USA Gulf region due to sub-freezing conditions, eventually leading to global material shortage. Regional offers were corrected positively after several polyolefin manufacturers such as Dow Chemicals and Equistar Chemicals announced hike in the prices of almost all polyolefins. A leading POE manufacturer raised POE offers by USD 150 per Mt w.e.f. Feb. 2021 due to soaring transportation, energy and raw material prices. Demand however surged after better offtakes were reported from the automotive and construction sector.
POE supplies were stable during the first quarter of 2021 as the addition of new upstream olefin cracker kept the feedstock availability balanced. However, some constraints were witnessed after the Chinese Lunar New Year holidays as some plants in China went for a maintenance turnaround. Demand showed mixed results, while prices of POE fluctuated during the quarter due to the resurgence of COVID in some parts of the region. The quarterly average of POE rates in Southeast Asia was assessed around USD 2373/ton.
During the first quarter of 2021, the European POE supplies were tight, owing to limited upstream products and feedstocks availability due to sluggish operation in several plants in northwest region amid the cold weather and transport hiccups, followed by the reduced imports from the USA. However, demand witnessed an improvement as the offtakes from downstream automotive and construction sector increased amid pick up in commercial and industrial activities.
For the Quarter Ending December 2020
Majority demand of POEs was generated from the automobile sector. During the final quarter, automotive industry of the Asian countries like China, India and Korea improved significantly. The reason behind this rise was improved COVID 19 situation and festive push from October to December. China automobile industry improved steadily from Q3 and the sectoral growth remained firm in Q4 2020. This rise improved the demand of POEs that led to increase in their price. In the Indian market, Ex-depot price of butene-based POE increased from USD 2341.5 per tonne in October to USD 2367.8 per tonne in December. RenewSys India, POE encapsulant manufacturing company announced that they had increased their POE encapsulant manufacturing capacity from 1.65 GW to 3 GW during October 2020. This expansion is likely to ramp up the utilization of POE-based solar module component production capacity in the coming years.
During the fourth quarter, US faced lower automobile sales compared to 2019, although the demand improved on Q-o-Q basis due to steady recovery from the COVID-19 situation. Several automobile giants like Ford, Volkswagen, Toyota etc. faced acute shortage of semiconductor chips for the auto parts, which forced them to cut their automotive production prompting lesser POE consumption. Many companies in the US expressed interest over investing on POE based encapsulants to improve the efficiency of solar panels amid rising environmental concerns.
New strain of COVID-19 during October in Europe, hit hard the European automobile sector. Sales of automobiles in Europe dropped by 7% on year-on-year basis, thereby affecting the demand of POEs across the region. The region is strongly investing in upgrading its POE-based solar encapsulant technologies with major companies coming up with latest advancements. Due to supply tightness price of POEs remained high due to high demand from automotive and elastomeric shoe soles.